He seeks to expand the duration of temporary work benefits.
He seeks to expand the duration of temporary work benefits.
If businesses find themselves with less work for their staff, they can put them on short-time work. In this scenario, the employment agency helps out by covering a portion of the wage deficit, but for no longer than 12 months. However, Federal Minister of Labour Hubertus Heil proposes to significantly lengthen this duration to prevent a wave of layoffs. Should this extension not occur, many could potentially lose their jobs.
A proposed regulation by Minister Heil aims to extend the maximum duration to 24 months, ending no later than December 31, 2025. This adjustment does not require approval from the Bundestag or Bundesrat, as it can be implemented by the coalition government alone. Sources within government circles suggest that the cabinet will approve this regulation before the holiday season. Beforehand, Minister Heil initiated the standard consultation process within his department.
The draft outlines that the extension of the short-time work payment period will likely result in an additional 260 million euros in costs for the federal employment agency. These extra expenses are expected to be balanced out by unspecified savings in unemployment benefits. In a period of short-time work, the employment agency remits 60% (67% for employees with children) of the lost net wage, which helps businesses remain solvent during a slump.
As per initial reports, the number of individuals on short-time work increased to 268,000 in September. This is an increase of 116,000 individuals from the year prior. Approximately 82% of those affected are employed in the manufacturing sector.
The extension of the short-time work duration, proposed by Minister Heil, could significantly impact the economy by incurring an additional 260 million euros in costs for the federal employment agency. If the proposed regulation is approved, it could potentially prevent a large-scale wave of layoffs in businesses facing economic slowdown.